Question

(Someone had previously answered this question and I got three wrong)

According to the lectures, which of the following ideas are representative of (neo)classical theory, which are representative of (post)Keynesian theory, and which are shared by both theories?

The paradox of thrift Savings equals investment in equilibrium (ignoring government or foreign sector)

The loanable funds market

"In the long run, we're all dead"

In equilibrium, aggregate demand (total planned spending) must equal output and income

Investment and savings are primarily functions of the rate of interest Capitalist economies tend to full employment, at least in the long run Interest rates fall when money saved exceeds the demand for those funds for investment, until savings equals investment Output, income, and employment fall when money saved exceeds intended investment, until savings equals investment

Saving is a leakage out of, and investment is an injection into, the spending flow Capitalist economies will normally fail to reach full employment due to insufficient aggregate demand

Demand, particularly intended investment, drives supply Supply creates its own demand

1. (neo)classical 2. (post)Keynesian 3. Both

Answer 1

The paradox of thrift Savings equals investment in equilibrium (ignoring government or foreign sector):- post – Keynesian theory (as post Keynesian economists strongly followed many ideas of Keynes and paradox of thrift is an important principle popularized by Keynes)

The loanable funds market:- neo – classical economics

In the long run, we're all dead:- it was shared by both the theories.

*hope the answer will help you.

I didn’t get what you are asking in last paragraph. We you are asking that which theory supports it than it must be neo-classical theory because Keynes criticized the idea that “supply creates its own demand” and so does the post –Keynesian as they followed the central components of Keynesian theories.